Quantifying cascading effects triggered by disrupted transportation due to the Great 2008 Chinese Ice Storm: implications for disaster risk management

AbstractCascading effects are usually one of the common ways through which relatively minor hazards can substantially impact society and economy; the failure of a single industrial sector or cluster of sectors can result in cascading effect on other interlinked sectors. This paper attempts to quantify this cascading effect triggered by disrupted transportation in Hunan province due to the Great 2008 Chinese Ice Storm and proposes operational risk management measures. The advantage of computable general equilibrium (CGE) model (reflecting indirect and induced effects and the nonlinearity of production block) makes it a promising model to simulate cascading effects and the contribution of risk management measures. A detail transportation system is constructed in the production part of standard CGE model. This study finds the following results: The economic loss of Hunan province is amplified by approximately 40 times by cascading effects during the 2 months following the disaster. Large-scale disasters induce more strong cascading effects than minor ones. Post-disaster system resilience effectively stops the spread of cascading effects. When the economic system resilience (e.g., improving the substitution between road transportation and other forms of transportation and efficiency of road transportation) is increased by 10 %, the economic losses induced by cascading effects can be reduced by approximately 60 %. Overall, improving post-disaster system resilience is a highly efficient and cheap measure to reduce the risk from cascading effects.